TA Sector Research

Daily Brief - 28 Feb 2024

Publish date: Wed, 28 Feb 2024, 11:35 AM

Sideways Pending Fresh Domestic Catalysts

The local blue-chip benchmark climbed to reach a fresh 21-month high Tuesday, supported by buying in key construction, plantation and utility heavyweights, while the broader market extended consolidation. The FBM KLCI ended up 11.2 points at 1,558.80, off an opening low of 1,545.16 and high of 1,559.02, but losers edged gainers 570 to 548 on active trade totalling 3.88bn shares worth RM3.09bn.

Supports at 1,543/1,520; Resistance at 1,580/1,600

The broader market should extend sideways trade pending fresh domestic catalysts to lift stocks from current consolidation, while investors await more cues from the region on the inflation trend. Key index supports cushioning downside on profit-taking pullbacks will be at 1,543, 1,520 and 1,505, the respective rising 10-day, 30-day and 50-day moving averages. Immediate resistance remains at 1,580, with stronger upside hurdles coming at 1,600 and 1,620.

Bargain SunCon & WCT Holdings

SunCon will need decisive breakout above the 21/2/24 high (RM2.79) to extend rally and aim for the 176.4%FP (RM2.87) and 200%FP (RM3.05) ahead, with immediate support from the 123.6%FP (RM2.46) to cushion profit-taking dips. WCT Holdings need to overcome the upper Bolllinger band (57sen) to aim for the 76.4%FR (61sen), with tougher hurdle from the 15/10/21 high (69sen), while the 50%FR (52sen) and 200-day ma (49sen) cushion downside.

Asian Markets Finish Mixed as Traders Await Key Economic Data

Asian markets ended mostly mixed Tuesday, as traders digest economic data from the region ahead of price data due in the U.S. this week. In Japan, the core consumer inflation slowed for a third straight month in January but beat forecasts and held at the central bank's 2% target, keeping alive expectations it will end negative interest rates by April. Traders are also waiting for data on U.S. durable goods orders due out on late Tuesday and the U.S. Federal Reserve's favored measure of inflation, the core personal consumption expenditures price index is due on Thursday. The inflation data could have a notable impact on the outlook for interest rates, as Fed officials have said they need greater confidence inflation is slowing before cutting rates.

On the geopolitical front, U.S. President Joe Biden said he hopes to have a ceasefire in the Israel-Hamas conflict in Gaza start by next Monday as the warring parties appeared to close in on a deal. The Nikkei 225 ended nearly flat at 39,239.52, while the Topix index gained 0.18% to 2,678.76. Australia’s S&P/ASX 200 inched higher by 0.13% to 7,663.00, and the Shanghai composite jumped 1.29% to 3,015.48. In Korea’s, the Kospi fell 0.89% to 2,625.05, while the while the small cap Kosdaq dropped 1.57% to 853.77.

Wall Street Subdued as Market Awaits Inflation Report

Wall Street's main indexes struggled for direction overnight as traders remained cautious ahead of the crucial inflation report later this week that could shed light on the possible timing of a Federal Reserve interest rate cut. The Dow Jones Industrial Average fell 0.25% to 38,972.41. The S&P inched up 0.17% to 5,078.18, while the Nasdaq Composite added 0.37% to 16,035.30. Stocks have lost momentum as traders regroup after the tumultuous run-up last week and as focus sharpens on the health of the US economy. The Commerce Department's report on personal income and spending, which is scheduled to be released on Thursday, includes a reading on consumer price inflation said to be preferred by the Federal Reserve. The inflation data could have a notable impact on the outlook for interest rates, as Fed officials have said they need greater confidence inflation is slowing before cutting rates.

Meanwhile, data from the U.S. Department of Commerce released overnight showed another rise in home prices and the largest drop in US durable goods orders in four years. On Monday, Kansas City Federal Reserve Bank President Jeffrey Schmid used a debut speech on policy to signal that he remains focused on the threat of high inflation and is in no rush to cut rates. In addition, Fed Governor Michelle Bowman also indicated she is in no hurry to cut rates, given upside risks to inflation that could stall progress or even cause price pressures to resurge. Retail giant Macy’s advanced about 3.4% after announcing it would close around 150 of its struggling stores following a revenue miss in the prior quarter.

Source: TA Research - 28 Feb 2024

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